Ana Botin’s op-ed “The EU’s shared purpose requires shared financing” (FT.com, April 7) picks up where your Big Read “The risk of losing Italy” leaves off by repeating the same call for some form of joint EU debt instrument to fund Italy and Spain.
Regardless of the euphemisms used whenever this subject comes up, what is being asked for are fiscal transfers from countries with a greater capacity to borrow to those with less. Leave aside for a moment whether this is or is not the right course of action. What is certain is that it will not happen without clarity and conditionality.
Take Italy — the Italian economy has underperformed on almost every metric for decades, due in large part to structural inefficiencies that Italians acknowledge but simply refuse to address. I can buy a skyscraper in London or New York without a notary while Italians make appointments, photocopy reams of paper, lick and place government stamps on them and pay exorbitant fees to countless notaries to sell a one-bedroom flat. Ever wondered why Italy has no pharmacy chains? There are rules, including the requirement to hold a degree in pharmacology to own — not to operate — a pharmacy, that prevent the ownership of more than one. Foreign investors or foreigners who have ever had to deal with any part of the judicial system run and never return. The fiscal authorities misuse their draconian powers to extort tax settlements in the full knowledge that recourse to the courts takes years.
About 60m tourists travel to Italy every year and we have a large emigrant population across the world — and yet Alitalia has never been solvent. Every government has seen the electoral advantage of favouring the oldest population outside Japan with unaffordable pension rights. The young and educated emigrate. This and much else, before the world had ever heard of Covid-19, explains Italy’s debt-to-gross domestic product ratio of 135 per cent.
Matteo Salvini and Italy’s other populists ask for “solidarity” when they mean money and then swing into perverse arrogance by suggesting that unless Germans pay up there will be no one to buy BMWs. The notion that German taxpayers should support Italian spending so that German workers can work their full shifts while Italians buy BMWs with the money Germans have just sent is (someone should tell Mr Salvini) unlikely to be persuasive. The endless insults based on the cliché of German historical stereotype serve no purpose other than to embarrass us.
The Covid-19 crisis may present an important opportunity out of this mess. Italian politicians should stand aside and ask Mario Draghi to negotiate the restructuring of Italy’s sovereign debt. This can be achieved in an orderly manner, with EU “solidarity”, by a concurrent fiscal transfer from the EU and a one-off tax on Italian domestic savings. Far from fearing any conditionality, Italians must hope that the conditions attached — riveted — to any such solution will prevent a repeat of the past decades.
New College Capital,
London SW1, UK
— to www.ft.com